Canada Joining the Anglosphere C-17 Club with CC-177

When Canada announced a program to replace its aging CC-130 Hercules fleet in November 2005, there was a great deal of speculation about where the C-17 might fit in. The fast answer was that it didn’t, but speculation revived following the Liberal government’s defeat and the formation of a new Conservative Party government. The new government justified that speculation, creating a separate Strategic Airlift competition – and the shape of its specifications suggested that Canada was about to reprise Australia’s recent move and buy at least 4 of Boeing’s C-17 Globemaster III aircraft. Australia, Britain, and the USA already operate the C-17; NATO is scheduled to buy 3-4 as a shared strategic airlift solution, but the procurement is in limbo.

Canada has traditionally resisted buying strategic airlift, choosing instead to participate in NATO’s SALIS consortium that leases ultra-heavy AN-124 aircraft for such roles. Other leased alternatives to the C-17s were available to Canada, including one based on Canadian soil – but in the end, the C-17 was the sole realistic competitor for this C$ 3.4 billion (USD$ 3 billion) program, and is entering service in Canada as the CC-177.

Canada has now taken delivery of its “CC-177s,” and begun flying missions. With new planes, however, comes new ancillary equipment.

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Canada’s Strategic Airlift RFP & Contracting Process

C-17 Globemaster III(click to view full)

“Canada First Defence Procurement – New Strategic & Tactical Airlift Fleets” notes that in addition to the C$4.9 billion program to replace its decaying CC-130 Hercules fleet of tactical transport aircraft, the new conservative government plans to spend C$ 1.8 billion (USD$ 1.6 billion) to buy strategic airlifters, plus $1.6 billion anticipated for 20 years of in-service support.

“Strategic airlift is the rapid transport of a large number of passengers and/or over-sized heavy cargo over long distances within Canada or between Canada and a theatre of operations – for example transporting two combat ready Light Armoured Vehicles to Afghanistan. Further, the Canadian Forces’ Disaster Assistance Response Team (DART) requires the use of strategic airlift to deploy on humanitarian aid operations.

Tactical airlift is different in that it is the lifeline of deployed forces, transporting equipment, troops and supplies to, within and from a theatre of operations. On Operation Archer, in Afghanistan, the CC-130 Hercules aircraft provides tactical airlift on a daily basis, without which the mission could not be sustained.”

They also had a favored option: Boeing’s C-17. More from the official release, which explains how their chosen procurement approach works:

“An Advance Contract Award Notice (ACAN) will be the procurement approach used to acquire four strategic lift aircraft… The ACAN process permits the Government to identify an intended contract award recipient based on the mandatory capabilities and detailed market research conducted by the Department. Industry is then given the opportunity to respond, should they feel they have an aircraft that meets this criteria. If no supplier submits a statement of capabilities that meets the requirements set out in the ACAN during its posting period of 30 calendar days, then the competitive requirements of the government’s contracting policy have been met.”

Obviously, such a proposal offers slim hopes for alternative suppliers, especially if the criteria are written to exclude other options. Canada’s Strategic Airlift RFP Requirements included:

Range and payload – capacity of 6,482 km with 39,000 kg, which translates to 4,025 miles with 86,000 lbs./ 43 tons.

Cargo compartment – Adequate cargo compartment size to transport wheeled and NATO standard palletized equipment (2.235 m x 2.743 m, or 7 1/3 ft x ft), wheeled equipment in a combat ready configuration, and Canadian Forces tactical helicopter assets (which may now include aircraft as large as a CH-47 Chinook). The aircraft must have the ability to load and unload palletized cargo at austere operating locations without the use of specialized loading equipment.

Fleet size – Minimum fleet of 4 aircraft.

Delivery – Delivery of first aircraft as soon as possible but no later than 18 months after contract award, and final aircraft delivery no later than 48 months after contract award.

Aircraft certification – Aircraft must be certified to aviation certification standards recognized by Canada by the contract award date.

Global remote operations – Capable of supporting Canadian Forces operations in Canada and potentially hostile theatres of operations overseas. The aircraft must be able to provide the required flexibility in a theatre of operations, capable of take off and landing from unpaved, short runways of 1,219m (4,000 ft) by 27.4m (90 ft) and airdrop personnel and/or equipment.

CC-177, CFB Bagotville(click to view full)

The final requirement under the “Canada First” defense procurement policy is a commitment to Canadian industrial benefits equivalent to 100% of the contract’s order value through a C-17 Industrial Benefits (IB) program coordinated by Industry Canada. In practice, the government generally counts a number of investments that a winning bidder has already made, in order to make this sort of requirement practical and allow it to buy equipment at all. C-17 manufacturer Boeing is already a major presence the Canadian economy, with more than 1,400 highly-skilled employees in Quebec, British Columbia and Manitoba generating approximately $1 billion in annual business. Canada has a large aerospace industry that exports 80% of its $22 billion annual production value. Given its convenient location, and Canada’s long-standing ITAR export controls exemption, it is also Boeing’s 3rd-largest international supplier base.

A fleet of 4-6 new Canadian C-17s, to be produced and delivered as part of the Long Beach production line’s final run (barring changes in US purchases), appeared to be the almost certain outcome of this RFP. Which it was. Canada has now signed the last contract of the C-17 purchase phase, and is receiving 4 of Boeing’s C-17 aircraft plus ancillary equipment. They will enter service as the CC-177. See below…

Canada’s CC-177s: Key Contracts & Events

Trenton arrival(click to view full)

Despite receiving submissions that included a leased BC-17 option (civilian specs variant of the C-17), Canada’s DND disqualified all competitors on August 11, 2006 and bought 4 C-17s et. al. under its “ACAN” contracting framework. See Appendix A for an examination of ACAN’s application to this project.

Oct 30/08: With new planes, comes new equipment. JBT Corporation announces a contract from the Canadian Government to supply 4 of the newly designed high capacity Halvorsen 44K Loaders to the Canadian Forces. The 44K Loader is a next generation version of the Halvorsen 25K Loader, capable of lifting 44,000 pounds of cargo within the same footprint. The contract for these first 4 loaders also includes options to purchase an additional 4 units as well as logistics support. Delivery is expected in December of 2008.

May 23/08: As part of its Industrial Regional Benefits, Boeing will be providing services and equipment to visual analytics labs at Simon Fraser University and the University of British Colombia. Visual analytics involves the analysis of complex data sets. SFU | UBC | CASR.

April 3/08: Boeing delivers the Canadian Forces’ 4th C-17 at the company’s Long Beach, CA facility, completing Canada’s order. The aircraft won’t join the 3 other Canadian C-17s of 429 Transport Squadron at 8 Wing/Canadian Forces Base in Trenton, Ontario until after it receives modifications at a Boeing facility in San Antonio, TX. Boeing release | Canadian Forces release.

Boeing has also partnered with RTI International, and invested in the RTI Claro facility in Montreal in support of the $346 million of contract work that RTI Claro will perform for Boeing in Quebec. The RTI contract will play a role in the current C-17 IB program as well as the anticipated Medium-Heavy Lift Helicopter IB program.

Boeing already has identified more than 66% of its total C-17 IB program obligations, and will identify the remaining 34% over the next 3 years. Boeing also agreed to a collateral agreement that provides further industry benefits worth $750 million over 20 years for the in-service support of the C-17 fleet. Boeing’s release adds that:

“As the Canadian Forces continue to modernize their defense systems, through efforts such as the Medium-Heavy Lift Helicopter program [CH-47Fs], Boeing anticipates that it will sign additional contracts to further expand its supplier base in the region.”

Jan 22/08:Boeing announces $52 million in contracts to companies in Canada’s Atlantic region, as part of Canada’s CC-177 order. These contracts do not have to be C-17 related, and winners include: IMP Aerospace (F/A-18 wire bundles), Wiebel Aerospace (subcontract from Goodrich, Direct work on C-17), and Memorial University of Newfoundland (establishment of an autonomous systems laboratory).

Oct 22/07: The CC-177 undertakes its first arctic mission, landing at Inuvik, Nunavut. Photo and caption.

Oct 18/07: The 2nd CC-177 lands at its operational base near Trenton, ON. 429 Squadron is part of 8 Wing at CFB Trenton. DND release.

Aug 30/07: The first CC-177 Globemaster to enter service in the CF delivers its first load of supplies into Kandahar, Afghanistan. “Crews landed the 429 Squadron airlifter in the wee hours of the morning at the Kandahar airport.” Source.

The mission’s high profile is partly due to the urge to justify’s DND’s new purchase, and partly political. Toronto in particular has a large Caribbean community, and is the site of a highly-recommended “Caribana” celebration each year.

July 18/07: The Hon. Gordon O’Connor, Minister of National Defence, announces the re-establishment of 429 Transport Squadron (“Bisons”) based at 8 Wing / CFB Trenton under the command of Lieutenant-Colonel Dave Lowthian. The squadron will be responsible for the conduct of C-17 operations and day-to-day maintenance.

An initial squadron capability will be in place for the arrival of the first C-17 aircraft in early August 2007, with remaining 3 C-17s to be delivered between October 2007 and April 2008. The squadron will consist of approximately 200 members, including pilots, loadmasters and technicians. DND release.

May 16/07:A Canadian DND release applauding the C-17 purchase also explains some of the preparations underway. The training is being conducted in 2 phases – a basic familiarization with the aircraft using simulators et. al., followed by embedding or “seasoning” training with a USAF unit.

A total of 4 crews per aircraft are being trained: 32 pilots, 24 loadmasters, 10 maintenance management staff and 96 technicians have been selected for the C-17 initially. Air movements and aero-medevac personnel began their training in late February 2008.

Feb 1/07: Boeing and Canada Sign Deal for Four C-17s. The February 1, 2007 contract is for the direct commercial sale of 4 airframes, which avoids the need for Foreign Military Sale approvals. Amounts were not disclosed, but delivery of the first aircraft could take place as soon as fall-winter 2007. Canadian DND release | Boeing release.

As part of this sale, Boeing will establish a facility in Canada to provide C-17 logistics support under the current Globemaster Sustainment Partnership. The proposed plan will require 7 U.S. Government representatives at the facility, plus up to 10 U.S. Government and 10 contractor representatives in country for annual participation in training, program management, and technical review.

Appendix A: Alternative Proposals

C-17 vs. AN-124(click to view full)

Was there ever an alternative to the purchase of C-17s from Boeing in Canada’s procurement process? Canadian Chief of Staff Gen. Hiller had been uninterested in strategic airlifters for Canada, saying that what matters is having the capability and “…whether you rent it, whether you lease it, whether you buy it – [we must] balance that against doing something else…”

During the South Asian tsunami, however Canada’s DART group found that the NATO AN-124s reserved under the SALIS program were already requisitioned, and hence unavailable. They did eventually deploy, but did so late. Part of the problem is that SALIS is based in Europe, and Canada is allotted just 125 hours of service per year under the 16-member multi-national arrangement.

Toronto-based Skylink Aviation Inc., responded to that issue with a bid for a more extensive arrangement of leased airlift services, using the same AN-124s and IL-76s the government was already leasing for flights to Kandahar, Afghanistan. The aircraft would be “on standby exclusive to DND,” and permanently based around the clock at CFB Trenton in Ontario, Canada rather than Europe. A similar offer involving BC-17X civilian versions of the C-17 was also made by the Canadian Globemaster consortium.

This would effectively extend a SALIS-type solution to North America, while keeping planes available for transportation of civilian outsize cargo (like the Boeing 777’s new GE90 engines, which need the AN-124 to transport them) within North America when the military didn’t need the planes. As DID noted in its April 2006 article “NATO’s AN-124s…,” the global civilian market for outsized airlift is expected to reach $500 million by 2010 and to continue growing thereafter – and over 50% of that market resides in North America.

IL-76TD & AN-124(click to view larger)

Skylink’s option for the standby fleet included 2 of the nearly C-17 sized Ilyushin IL-76s, and 2 more of the enormous Antonov AN-124-100 which is bigger than the US C-5 Galaxy. Assuming 400 flying hours per year per aircraft, Skylink quoted a price of $12 million per annum for the IL-76s, and about $30 million for the An-124s. These aircraft would be available almost immediately, as IL-76 and AN-124 aircraft from Skylink are already transporting Canadian soldiers and equipment to Kandahar, Afghanistan. Over 20 years, that cost would work out to C$ 840 million in present-day dollars – a substantial savings.

That solution could meet range, cargo, fleet size, and delivery requirements. The certification requirement was trickier: the AN-124 is certified for civil flight, but the IL-76 is not. This had been dealt with in the past by issuing temporary certification when IL-76s were used to carry Canadian troops. Freight carrier Volga-Dnepr had formed a new division to oversee IL-76 conversions and obtain new certification for these aircraft under FAR/JAR/AP 25 international standards, so relief was on the horizon. See this CASR background article for more. Unless the Canadian government chose to bend the rules, however, the certification requirement excluded the IL-76. Meanwhile, the “global remote operations” requirement effectively excluded the AN-124s from consideration without IL-76s to back them up.

With the C-17 left as the only aircraft that could meet the RFP criteria, the way was clear to buy the planes as the government has originally intended.

USAF: C-17 vs. BC-17(click to view full)

Almost. A “Canadian CAMAA” (Commercial Application of Military Airlift Aircraft) bid based on a proposed USAF concept was submitted by the Canadian Globemaster partnership. It proposed negotiations with the USAF to lease 2 USAF C-17s within 18 months, followed by purchase up to 8 BC-17X aircraft that would be available on similar “standby exclusive to DND” terms from Trenton, Ontario, Canada. These aircraft could also be made available for commercial outside cargo use, however, or lease their hours to NATO’s C-17 pool partners under appropriate terms. A June 2002 advance opinion from the US State Department [PDF] has indicated no objection in principle, subject to a number of conditions – some of which would be ameliorated by Canada’s unique privileged status re: American ITAR defense export restrictions.

The BC-17 is the civilian version of the C-17, offering 90% commonality and slightly more cargo space due to the removal of air-to-air refueling. Unlike the C-17, it could be made available to commercial bidders – but it had never sold, because existing AN-124s had already locked up the nascent oversize air freight market when the C-17 program began. As the freight market has grown, however, several studies have concluded that demand could support (for instance) 10 BC-17s by 2010, in addition to the current AN-124 fleet. Hence the Canadian Globemaster “Canadian CAMAA” bid, and also Antonov’s recent agreement with key carriers, accompanied by noises about further AN-124 production.

BC-17X: disqualified.(click to view full)

Canada’s DND rejected this bid too, on 2 grounds. The first objection was that the offer did not guarantee delivery of the first aircraft within 18 months as specified. The second objection was that the aircraft type was not civil certified – which is true, though the C-17 is. This was something of a catch-22 response, as meeting the 18-month schedule for military C-17 delivery required USAF cooperation anyway via an production-line switch agreement. The Canadian government was still negotiating that agreement right into 2007, long after it had specified the C-17 as its choice and begun procurement activities.

Nevertheless, it is true that the Canadian Globemaster bid did not qualify under the specifications as written. It is also true that some aspects of the bid as submitted were significantly outside the contractor’s lane, including procurement proposals unrelated to the airlift requirement. Which left all alternatives disqualified, and freed the government to go ahead and do what it wished to do in the first place.

Despite the limitations in some of the bids, it is difficult not to conclude that this was the original intent of the ACAN “RFP.”